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Officials at American Express Co. have dismissed outside auditor Ernst & Young (E&Y) in favor of PricewaterhouseCoopers (PwC), thus ending an audit relationship dating back to 1975.

“The audit committee’s decision to replace the current auditors was made after a robust proposal process that included three of the four major international accounting firms, including E&Y,” Amex officials said.

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Executives at American Express said E&Y will audit the 2004 financials and PwC will audit the 2005 reports.

In explaining the change, Amex officials said they had no disagreements with E&Y on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. If that were the case, and the disagreements were not resolved to E&Y’s satisfaction, the auditor would have had to make reference to the problems in their reports. According to Amex, there have been no “reportable events” during the two most recent fiscal years and through November 22, 2004.

In 2003, Amex shelled out $23 million to E&Y in audit fees, and $3.5 million for other services. The audit fee was the largest paid by any U.S.-based E&Y client, according to the Wall Street Journal, which cited Audit Analytics.The Journal reported that an E&Y spokesman declined to comment on the reasons the firm was dropped, but said the audit firm would work to make sure that “a seamless transition” takes place.

E&Y has been in the Securities and Exchange Commission’s (SEC) cross-hairs for about a year, including one probe into whether the audit firm violated federal auditor independence rules by entering a so-called profit-sharing agreement in the 1990s with Amex’s travel-service unit, the Journal reported.

In court filings, the SEC cited the travel-unit contract as evidence of possible widespread compliance problems regarding auditor independence rules at E&Y, the paper reported. The court documents concerned a disciplinary proceeding against E&Y over its business relationship with another client, PeopleSoft Inc.

The SEC also cited other internal E&Y documents that said the firm had “strategic partnering relationships” with Amex and other audit clients, according to the Journal. In April, the administrative law judge overseeing E&Y’s disciplinary proceedings wrote that she gave the little weight to the documents when she ruled to bar the auditor from accepting new publicly traded audit clients for six months.